Correlation Between Standard Life and Alliancebernstein

Can any of the company-specific risk be diversified away by investing in both Standard Life and Alliancebernstein at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Standard Life and Alliancebernstein into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Standard Life Aberdeen and Alliancebernstein Global High, you can compare the effects of market volatilities on Standard Life and Alliancebernstein and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Standard Life with a short position of Alliancebernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Life and Alliancebernstein.

Diversification Opportunities for Standard Life and Alliancebernstein

0.46

Correlation Coefficient

Standard Life  Alliancebernstein

Very weak diversification

The 3 months correlation between Standard and Alliancebernstein is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Standard Life Aberdeen and Alliancebernstein Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Standard Life is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Standard Life Aberdeen are associated (or correlated) with Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Standard Life i.e., Standard Life and Alliancebernstein go up and down completely randomly.

Pair Corralation between Standard Life and Alliancebernstein

Assuming the 90 days horizon Standard Life Aberdeen is expected to under-perform the Alliancebernstein. In addition to that, Standard Life is 4.44 times more volatile than Alliancebernstein Global High. It trades about -0.18 of its total potential returns per unit of risk. Alliancebernstein Global High is currently generating about -0.08 per unit of volatility. If you would invest  1,090  in Alliancebernstein Global High on October 10, 2024 and sell it today you would lose (23.00) from holding Alliancebernstein Global High or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Standard Life Aberdeen  vs.  Alliancebernstein Global High

Standard Life Aberdeen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Life Aberdeen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alliancebernstein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliancebernstein Global High has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Alliancebernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Standard Life and Alliancebernstein

The main advantage of trading using opposite Standard Life and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Life position performs unexpectedly, Alliancebernstein can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alliancebernstein will offset losses from the drop in Alliancebernstein's long position.

The idea behind Standard Life Aberdeen and Alliancebernstein Global High pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.